22120 Federal Register / Vol. 76, No. 76 / Wednesday, April 20, 2011 / Notices 

2830 (this is not a toll-free number). 

Persons with hearing or speech 

impairments may access that number 

through TTY by calling the Federal 

Information Relay Service at (800) 877– 

8339. 

SUPPLEMENTARY INFORMATION: HUD has 

the authority to address deficiencies in 

the performance of lenders’ loans as 

provided in HUD’s mortgagee approval 

regulations at 24 CFR § 202.3. On May 

17, 1999 HUD published a notice (64 FR 

26769), on its procedures for 

terminating Origination Approval 

Agreements with FHA lenders and 

placement of FHA lenders on Credit 

Watch status (an evaluation period). In 

the May 17, 1999 notice, HUD advised 

that it would publish in the Federal 

Register a list of mortgagees, which 

have had their Approval Agreements 

terminated. On January 21, 2010 HUD 

issued Mortgagee Letter 2010–03 which 

advised the extended procedures for 

terminating Underwriting Authority of 

Direct Endorsement mortgagees. 

Termination of Direct Endorsement 

Approval: Approval of a DE mortgagee 

by HUD/FHA authorizes the mortgagee 

to underwrite single family mortgage 

loans and submit them to FHA for 

insurance endorsement. The Approval 

may be terminated on the basis of poor 

performance of FHA-insured mortgage 

loans underwritten by the mortgagee. 

The termination of a mortgagee’s DE 

Approval is separate and apart from any 

action taken by HUD’s Mortgagee 

Review Board under HUD’s regulations 

at 24 CFR part 25. 

Cause: HUD’s regulations permit HUD 

to terminate the DE Approval with any 

mortgagee having a default and claim 

rate for loans endorsed within the 

preceding 24 months that exceeds 250 

percent of the default and claim rate 

within the geographic area served by a 

HUD field office, and also exceeds the 

national default and claim rate. For the 

quarterly review period ending 

September 30, 2010, HUD is terminating 

the DE Approval of mortgagees whose 

default and claim rate exceeds both the 

national rate and 250 percent of the 

field office rate. 

Effect: Termination of the DE 

Approval precludes the mortgagee from 

underwriting FHA-insured single-family 

mortgages within the area of the HUD 

field office(s) listed in this notice. 

Mortgagees authorized to purchase, 

hold, or service FHA-insured mortgages 

may continue to do so. 

Loans that closed or were approved 

before the Termination became effective 

may be submitted for insurance 

endorsement. Approved loans are those 

already underwritten and approved by a 

DE underwriter, and cases covered by a 

firm commitment issued by HUD. Cases 

at earlier stages of processing cannot be 

submitted for insurance by the 

terminated mortgagee; however, the 

cases may be transferred for completion 

of processing and underwriting to 

another mortgagee with DE Approval in 

that area. Mortgagees are obligated to 

continue to pay existing insurance 

premiums and meet all other obligations 

associated with insured mortgages. 

A terminated mortgagee may apply for 

reinstatement of the DE Approval if the 

DE Approval for the affected area or 

areas has been terminated for at least six 

months and the mortgagee continues to 

be an approved mortgagee meeting the 

requirements of 24 CFR 202.5, 202.6, 

202.7, 202.10 and 202.12. The 

mortgagee’s application for 

reinstatement must be in a format 

prescribed by the Secretary and signed 

by the mortgagee. In addition, the 

application must be accompanied by an 

independent analysis of the terminated 

office’s operations as well as its 

mortgage production, specifically 

including the FHA-insured mortgages 

cited in its termination notice. This 

independent analysis shall identify the 

underlying cause for the mortgagee’s 

high default and claim rate. The 

analysis must be prepared by an 

independent Certified Public 

Accountant (CPA) qualified to perform 

audits under Government Auditing 

Standards as provided by the 

Government Accountability Office. The 

mortgagee must also submit a written 

corrective action plan to address each of 

the issues identified in the CPA’s report, 

along with evidence that the plan has 

been implemented. The application for 

a new Agreement should be in the form 

of a letter, accompanied by the CPA’s 

report and corrective action plan. The 

request should be sent to the Director, 

Office of Lender Activities and Program 

Compliance, 451 Seventh Street, SW., 

Room B133–P3214, Washington, DC 

20410–8000 or by courier to 490 

L’Enfant Plaza, East, SW., Suite 3214, 

Washington, DC 20024–8000. 

Action: The following mortgagees 

have had their DE Approvals terminated 

by HUD: 

Mortgagee name Mortgagee home office address HUD office jurisdictions Termination 

effective date 

Homeownership centers 

Allied Home Mortgage Corp .......... 6100 Pinemont Dr., Ste 220, 

Houston, TX 77092.

Cleveland ....................................... 1/18/11 Philadelphia. 

Mountain States Mortgage Center 1333 E. 9400 S., Sandy, UT 

84093.

Indianapolis .................................... 2/28/11 Atlanta. 

Mountain States Mortgage Center 1333 E. 9400 S., Sandy, UT 

84093.

Salt Lake City ................................. 2/28/11 Denver. 

Nationwide Home Loans, Inc ......... 4100 NE 2nd Ave., Miami, FL 

33137.

Miami .............................................. 1/18/11 Atlanta. 

US Mortgage Finance Corp ........... 225 International Cir., Ste 102, 

Cockeysville, MD 21030.

Washington DC .............................. 1/18/11 Philadelphia. 

Dated: April 13, 2011. 

Robert C. Ryan, 

Acting Assistant Secretary for HousingFederal Housing Commissioner. 

[FR Doc. 2011–9502 Filed 4–19–11; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

[Docket No. FR- 5511–N–01] 

Credit Watch Termination Initiative; 

Termination of Origination Approval 

Agreements 

AGENCY: Office of the Assistant 

Secretary for Housing—Federal Housing 

Commissioner, HUD. 

ACTION: Notice. 

SUMMARY: This notice advises of the 

cause and effect of termination of 

Origination Approval Agreements taken 

by HUD’s Federal Housing 

Administration (FHA) against HUDapproved mortgagees through the FHA 

Credit Watch Termination Initiative. 

This notice includes a list of mortgagees 

which have had their Origination 

Approval Agreements terminated. 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 76, No. 76 / Wednesday, April 20, 2011 / Notices 22121 

FOR FURTHER INFORMATION CONTACT: The 

Quality Assurance Division, Office of 

Housing, Department of Housing and 

Urban Development, 451 Seventh Street, 

SW., Room B133–P3214, Washington, 

DC 20410–8000; telephone (202) 708– 

2830 (this is not a toll-free number). 

Persons with hearing or speech 

impairments may access that number 

through TTY by calling the Federal 

Information Relay Service at (800) 877– 

8339. 

SUPPLEMENTARY INFORMATION: HUD has 

the authority to address deficiencies in 

the performance of lenders’ loans as 

provided in HUD’s mortgagee approval 

regulations at 24 CFR § 202.3. On May 

17, 1999 HUD published a notice (64 FR 

26769), on its procedures for 

terminating Origination Approval 

Agreements with FHA lenders and 

placement of FHA lenders on Credit 

Watch status (an evaluation period). In 

the May 17, 1999 notice, HUD advised 

that it would publish in the Federal 

Register a list of mortgagees, which 

have had their Origination Approval 

Agreements terminated. 

Termination of Origination Approval 

Agreement: Approval of a mortgagee by 

HUD/FHA to participate in FHA 

mortgage insurance programs includes 

an Origination Approval Agreement 

(Agreement) between HUD and the 

mortgagee. Under the Agreement, the 

mortgagee is authorized to originate 

single-family mortgage loans and submit 

them to FHA for insurance 

endorsement. The Agreement may be 

terminated on the basis of poor 

performance of FHA-insured mortgage 

loans originated by the mortgagee. The 

termination of a mortgagee’s Agreement 

is separate and apart from any action 

taken by HUD’s Mortgagee Review 

Board under HUD’s regulations at 24 

CFR part 25. 

Cause: HUD’s regulations permit HUD 

to terminate the Agreement with any 

mortgagee having a default and claim 

rate for loans endorsed within the 

preceding 24 months that exceeds 200 

percent of the default and claim rate 

within the geographic area served by a 

HUD field office, and also exceeds the 

national default and claim rate. For the 

quarterly review period ending 

September 30, 2010, HUD is terminating 

the Agreement of mortgagees whose 

default and claim rate exceeds both the 

national rate and 200 percent of the 

field office rate. 

Effect: Termination of the Agreement 

precludes branch(es) of the mortgagee 

from originating FHA-insured singlefamily mortgages within the area of the 

HUD field office(s) listed in this notice. 

Mortgagees authorized to purchase, 

hold, or service FHA-insured mortgages 

may continue to do so. 

Loans that closed or were approved 

before the termination became effective 

may be submitted for insurance 

endorsement. Approved loans are those 

already underwritten and approved by a 

DE underwriter, and cases covered by a 

firm commitment issued by HUD. Cases 

at earlier stages of processing cannot be 

submitted for insurance by the 

terminated branch; however, they may 

be transferred for completion of 

processing and underwriting to another 

FHA-insured mortgagee with direct 

endorsement approval for the area 

covered by the termination. Mortgagees 

are obligated to continue to pay existing 

insurance premiums and meet all other 

obligations associated with insured 

mortgages. 

A terminated mortgagee may apply for 

reinstatement of the Origination 

Approval Agreement if the approval for 

the affected branch or branches has been 

terminated for at least six months and 

the mortgagee continues to be an 

approved mortgagee meeting the 

requirements of 24 CFR 202.5, 202.6, 

202.7, 202.8 and 202.12. However, 

Mortgagee Letter 2010–20 and Final 

Rule 5356–F–02 at 24 CFR 202 

eliminates FHA approval for loan 

correspondents after December 31, 2010. 

Therefore, HUD will not accept requests 

for reinstatement from loan 

correspondents after that date. The 

mortgagee’s application for 

reinstatement must be in a format 

prescribed by the Secretary and signed 

by the mortgagee. In addition, the 

application must be accompanied by an 

independent analysis of the terminated 

office’s operations as well as its 

mortgage production, specifically 

including the FHA-insured mortgages 

cited in its termination notice. This 

independent analysis shall identify the 

underlying cause for the mortgagee’s 

high default and claim rate. The 

analysis must be prepared by an 

independent Certified Public 

Accountant (CPA) qualified to perform 

audits under Government Auditing 

Standards as provided by the 

Government Accountability Office. The 

mortgagee must also submit a written 

corrective action plan to address each of 

the issues identified in the CPA’s report, 

along with evidence that the plan has 

been implemented. The application for 

a new Agreement should be in the form 

of a letter, accompanied by the CPA’s 

report and corrective action plan. The 

request should be sent to the Director, 

Office of Lender Activities and Program 

Compliance, 451 Seventh Street, SW., 

Room B133–P3214, Washington, DC 

20410–8000 or by courier to 490 

L’Enfant Plaza, East, SW., Suite 3214, 

Washington, DC 20024–8000. 

Action: The following mortgagees 

have had their Origination Agreements 

terminated by HUD: 

Mortgagee name Mortgagee branch office address HUD office jurisdictions Termination 

effective date 

Homeownership 

centers 

Consumer Mortgage Group, Inc .... 1460 Route 9 North, Woodbridge, 

NJ 07095.

Newark ........................................... 1/18/11 Philadelphia. 

Equity Source Home Loans LLC ... 150 Airport Rd., Ste 1100, Lakewood, NJ 08701.Newark ........................................... 1/18/11 Philadelphia. 

Mountain States Mortgage Center 1333 E 9400 S, Sandy, UT 84093. Salt Lake City ................................. 2/28/11 Denver. 

Mountain States Mortgage Center 1333 E 9400 S, Sandy, UT 84093. Indianapolis .................................... 2/28/11 Atlanta.

Integrity Mortgage & Financial Inc 5528 Library Lane, Colorado 

Springs, CO 80918.

Denver ............................................ 1/11/11 Denver. 


srobinson on DSKHWCL6B1PROD with NOTICES
22122 Federal Register / Vol. 76, No. 76 / Wednesday, April 20, 2011 / Notices 

Dated: March 29, 2011. 

Joseph F. Smith, 

General Deputy Assistant Secretary for 

Housing—Federal Housing Commissioner. 

[FR Doc. 2011–9504 Filed 4–19–11; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

[Docket No. FR–5413–N–02] 

Section 8 Housing Choice Voucher 

Program—Demonstration Project of 

Small Area Fair Market Rents in 

Certain Metropolitan Areas, Discussion 

of Comments, and Request for 

Participation 

AGENCY: Office of the Assistant 

Secretary for Policy Development and 

Research, HUD. 

ACTION: Final notice establishing the 

Small Area Fair Market Rent (FMR) 

Demonstration Project and requesting 

participation from metropolitan public 

housing agencies. 

SUMMARY: Today’s notice provides 

HUD’s responses to comments filed in 

response to a May 18, 2010, notice (75 

FR 27808) announcing HUD’s intent to 

operate a small area FMR demonstration 

project in several metropolitan areas. 

The purpose of this demonstration 

project is to provide voucher holders 

with the opportunity to move to areas of 

greater opportunity. This notice 

provides additional details regarding the 

operation of the tenant-based Housing 

Choice Voucher (HCV) program in areas 

selected to participate in the 

demonstration, establishes the criteria 

for selecting public housing agencies 

(PHAs) for participation in the 

demonstration, and requests interested 

PHAs to apply for participation in the 

demonstration according to instructions 

published in this notice. Metropolitan 

PHAs that would like to participate in 

the small area FMR demonstration 

project may apply, as discussed later in 

this notice, with an anticipated 

selection date of July 1, 2011. In order 

to assess the impact of the 

demonstration, participating PHAs will 

be expected to provide HUD with 

additional data specified in this notice 

beyond what is normally required. 

DATES: Date to request participation in 

demonstration: June 6, 2011. 

ADDRESSES: Interested persons are 

invited to request participation in the 

small area FMR demonstration by 

submitting a request to the Office of 

General Counsel, Rules Docket Clerk, 

Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

Room 10276, Washington, DC 20410– 

0001. Communications should refer to 

the above docket number and title and 

should contain the information 

specified in the ‘‘Request to Participate’’ 

section. 

Public Inspection of Requests. All 

requests to participate submitted to 

HUD will be available, without charge, 

for public inspection and copying 

between 8 a.m. and 5 p.m. weekdays at 

the above address. Due to security 

measures at the HUD Headquarters 

building, an advance appointment to 

review the requests to participate must 

be scheduled by calling the Regulations 

Division at 202–708–3055 (this is not a 

toll-free number). 

FOR FURTHER INFORMATION CONTACT: For 

technical information on the 

methodology used to develop small area 

FMRs, please contact Peter B. Kahn or 

Marie L. Lihn, Economic and Market 

Analysis Division, Office of Economic 

Affairs, Office of Policy Development 

and Research, telephone number 202– 

708–0590 (this is not a toll-free 

number). Persons with hearing or 

speech impairments may access this 

number through TTY by calling the tollfree Federal Information Relay Service 

at 800–877–8339. The small area FMR 

dataset, Federal Register notices, and 

links to participation requests (as well 

as comments to the original May 18, 

2010, notice) are available on the HUD 

Web site at http://www.huduser.org/

portal/datasets/fmr.html. The HUD 

USER information line at 800–245–2691 

may answer questions on this 

information. (Other than the TDD 

numbers and the HUD USER 

information line, telephone numbers are 

not toll free.) 

Electronic Data Availability: This 

Federal Register notice is available 

electronically from the HUD User Web 

site at http://www.huduser.org/portal/

datasets/fmr.html. Federal Register 

notices also are available electronically 

at http://www.gpo.gov/fdsys/browse/ 

collection.action?collectionCode=FR, 

the U.S. Government Printing Office 

Web site. A system for looking up small 

area FMRs based on Final Fiscal Year 

(FY) 2011 FMRs is available at http://

www.huduser.org/portal/datasets/fmr/

fmrs/index_sa.html. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 8 of the United States 

Housing Act of 1937 (42 U.S.C. 1437f) 

(USHA) authorizes housing assistance to 

aid lower-income families in renting 

safe and decent housing. In the HCV 

program, the FMR is the basis for 

determining the ‘‘payment standard 

amount’’ used to calculate the maximum 

monthly subsidy for an assisted family 

(see 24 CFR 982.503). In general, the 

FMR for an area is the amount that 

would be needed to pay the gross rent 

(shelter rent plus utilities) of privately 

owned, decent, and safe rental housing 

of a modest (nonluxury) nature with 

suitable amenities. In addition, all rents 

subsidized under the HCV program 

must meet reasonable rent standards. 

Currently, FMRs are calculated for all 

nonmetropolitan counties and 

metropolitan areas. The same FMR is 

available throughout a nonmetropolitan 

county or metropolitan area, which 

generally is comprised of several 

metropolitan counties. FMRs in a 

metropolitan area represent the 40thpercentile (or in special circumstances 

the 50th-percentile) gross rent of the 

entire HUD-defined metropolitan area. 

PHAs may set a payment standard 

within 90 percent to 110 percent of the 

FMR. PHAs may determine that 

payment standards that are higher than 

110 percent, or lower than 90 percent, 

are needed to make the HCV program 

work in subareas of their market; in 

such an instance, a PHA would request 

HUD approval for a payment standard 

below 90 percent or an exception 

payment standard above 110 percent. 

This request could not represent more 

than 50 percent of the population of the 

area (see 24 CFR 982.503). 

On May 18, 2010, HUD published a 

notice in the Federal Register (75 FR 

27808) seeking public comment on a 

small area FMR demonstration project. 

Today’s notice discusses those 

comments and provides an opportunity 

for PHAs to volunteer for the 

demonstration project that will begin 

later in FY 2011. 

The Housing Choice Voucher (HCV) 

program is the only HUD program 

where small area FMRs will be used 

during the demonstration. All other 

programs must use the area-wide FMRs 

listed in Schedule B of the current FMR 

Federal Register notice (75 FR 61253, 

October 4, 2010). HUD expects that 

small area FMRs will provide HCV 

tenants with greater ability to move into 

opportunity areas, which are where 

jobs, transportation, and educational 

opportunities exist, and will reduce 

undue subsidy in lower-rent areas. 

Small area FMRs will alter some 

administrative responsibilities of PHAs 

that administer HCV programs, but it is 

unclear what the net effect on 

administrative costs will be. A copy of 

the Federal Register notice announcing 

this program can be accessed at http:// 

www.huduser.org/portal/datasets/fmr/

fmr2010f/Small_Area_FMRs.pdf. 


srobinson on DSKHWCL6B1PROD with NOTICES